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Could Anaheim be the next OC city to welcome cannabis businesses?
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Anaheim officials appear poised to have a serious discussion in coming weeks about whether to reverse their longstanding opposition and allow cannabis businesses in the city.
Councilwoman Lucille Kring, who voted against pot businesses in 2015 and 2017, has asked for a council discussion on whether to either approve a framework for permitting such businesses or put the issue before city voters.
Explaining her change of heart, Kring said in a January interview that she has used CBD oil to calm her pets and has toured a wholesale cannabis business and two legal retail shops.
“I was so impressed,” she said of one retail outlet. “The place is as clean as anything I’ve ever seen. The people are very knowledgeable.”
Kring noted that illegal pot shops already operate in the city, which spends public money on enforcement to shut them down.
A city spokeswoman said in a 2019 email that Anaheim spends about $100,000 a year fighting illegal dispensaries and had handled more than 95 cases over the previous five years.
Other council members could be on board with Kring’s idea. Councilmen Jose Moreno and Jordan Brandman both said on Friday, May 1, that they would support allowing cannabis businesses in Anaheim.
Moreno said he’d want to see rules that would limit the number of retail shops, keep them away from schools and residential neighborhoods, require detailed security plans and protect cannabis industry workers. He’ll also be looking for a conflict of interest policy “so that council members or staff members are not somehow themselves benefiting from these permits.”
Brandman mentioned changing the city’s cannabis policy during remarks when he was sworn in to office in 2018, and since then the issue “has become even more important to me personally,” he said – a fire at an illegal marijuana growing operation set a shopping center ablaze in his district late last year, destroying other businesses.
“This really shouldn’t be a philosophical policy issue anymore,” since a majority of voters in Anaheim and statewide supported Prop. 64, the 2016 measure that legalized adult use of cannabis, Brandman said.
And with the shutdown of tourism and entertainment businesses that help fund city services, finding other sources of funding is “now a dire and critical fiscal issue,” he said.
Jerred Kiloh, president of the United Cannabis Business Association, an industry trade group based in Los Angeles, said he isn’t surprised to hear Anaheim might consider welcoming the legal cannabis industry as city leaders search for new tax revenue streams.
“We’re still open,” Kiloh said, with California and many other states identifying cannabis an “essential business” that can stay open during shelter-at-home orders. “We’re still generating revenue. We’re still generating taxes. We’re still generating jobs.”
That “essential business” label also helps chip away at the stigma that still plagues the industry, Kiloh said.
“So even if it was a political hot potato that they didn’t want to touch before, now you’re seeing it as a normalized business,” he said.
The industry offers generous tax revenue per square foot, Kiloh noted, with Los Angeles raking in more than $68 million from the industry in the 2019 fiscal year. But he cautioned cities desperate for funds against setting their local tax rates too high, noting the industry already pays hefty state taxes and is competing with an illicit market that doesn’t pay any taxes at all.
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Kiloh said the legal industry is far from saturated, with plenty of pent-up demand. Retail shops are still banned in three-quarters of California cities, with an estimated 70% of sales still taking place in the illicit market. Santa Ana is the only Orange County city that allows retail cannabis sales, though several others permit manufacturing, distribution and testing labs.
In Anaheim, Kiloh noted that some 60% of voters approved Proposition 64 to legalize recreational cannabis in 2016.
“In reality, the voters wanted legal cannabis in their city and they didn’t get it,” he said. “So the city could give people what they want while increasing their tax base.”
Given the city’s dependence on tourism, Kiloh said cannabis could be a particularly good fit as that sector comes back. He noted that 35% of sales in his L.A. store, The Higher Path, go to tourists.
Anaheim officials are expected to discuss cannabis policy May 12.
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